Archives for August 2013

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Last month I wrote a guest article for PTMoney.com on the state of privacy versus frugality. Basically, I asked the simple question: What information would you voluntarily give up to save a buck? The fact is that we are bombarded with offers, coupons, and savings. The paper (if you get one) has a coupon section, there are tons of sites for freebies, and coupon sites are a dime-a-dozen. Amidst the swirl of opportunity are privacy sacrifices. Sometimes you can’t even realize what you give up to save. But did you know you can limit sharing of private information and still get a great deal?

Privacy Disclosures

Rather than a debate or structural question/answer to the problem of privacy concerns, this article will help you take action. We may be living in a state of Total Information Awareness on a societal level, but there are steps you can take to limit the sharing of certain banking information.

Each time you apply for a credit card, information is sent to the bank. From your social security number to date of birth, the data is highly important and needs to stay relatively private. We entrust our banks with these details. Thankfully, they keep their servers encrypted and have a direct interest in limiting breaches (it’s bad for business).

It’s An Opt-Out World

But much more nefarious are the detailed disclosures you’re likely voluntarily sharing. By sharing your transaction history, credit worthiness, and other personal, banking details, the bank you use can profit off of your account (to any even greater extent). There’s nothing inherently illegal about this behavior, but nowadays, you can limit much of the sharing.

Regrettably, the credit and banking organizations force consumers to opt-out, rather than opt-in to targeting, marketing, and information sharing. Until federal laws change this behavior, we must be critical consumers and do everything we can to be empowered.

How To Limit Affiliate Sharing

Reducing your information footprint with the banks and credit companies can be challenging. As mentioned, by default, you’re sharing more than you have to. It’s important to realize what you can limit and who you have to contact.

Each company operates on a different set of standards for information sharing (or privacy leaks). Read the documentation carefully, and look for a phone number on each notice to limit disclosures. The following are 5 popular companies that people bank with and links to their privacy notices:

These are just some examples. My recommendation is to search for “privacy notice (insert bank name here)” on any popular engine. Click on your bank and they should (are legally obligated to) tell you how to opt-out of secondary information sharing. If all else fails, call the number on the back of your card.

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Choose A Major

If you’re thinking about college, recently enrolled, or attending, you’ve probably thought a lot about majors. University small talk frequently begins with, “What are you studying?” Your parents probably pressure you to find and/or settle on a major; graduate in four years, they stress. From advisers to counselors to friends to acquaintances, the onslaught for selecting a major can be daunting. Unfortunately, it’s not the most important question to prevent and tackle student loan debt.

The Secret To Less Debt

How do you prevent or lessen student loan debt if you’re footing the bill?

The secret is simple: Project your future income.

More and more students are entering into college – oblivious of the financial ramifications. As Congress finds “solutions” to our $1.2 trillion student loan debt crisis, students are floundering. Now more than ever, it’s important to know how to stem the tide and beat the debt. But the key is knowing what your major is worth.

Frankly, it sucks to think about majors from a financial, future-income perspective. It’s not sexy. Universities often depict a wealth of opportunities and encouragement for any field of study. They’re selling studies irrespective of salary. This can be dangerous.

The reality is that universities are selling a degree – charging thousands – without telling you the whole picture. Do your homework before settling on your dream degree.

Example Degrees

Thinking about a degree in philosophy? Starting median salary is $39,900.

How about psychology? Prepare for an abysmal $35,900.

What about financially-oriented degrees like economics? An impressive $50,100.

And the major that takes the top spot: Chemical Engineering. Right out of college, you can expect to make about $63,200.

Next time someone says, “Follow your dreams!” Ask yourself, “How much will this cost me and what will be my future salary?” If you graduate with $80,000 in student loan debt, it’s best to have a good job lined up. My recommendation: You could find part-time and full-time jobs on job search sites. Otherwise, the crushing, choking student loan debt will ruin those idyllic dreams.

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I’ve rented for years now, and I’m not sure I ever want to purchase a house. In a previously written article for PTMoney.com, I cataloged the many reasons why I hesitate to buy. Home insurance may never be applicable to me, but what about renter’s insurance?

Multi-Line Discounts

Every time I call Geico to ask for discounts or check my car insurance premiums, a representative suggests a particular “discount” for also having renter’s insurance. Invariably, I ask what that costs. Would having a multi-line discount make my overall bill cheaper? No.

Unfortunately, this multi-line “discount” is simply a marketing ploy to attract non-critical consumers. Do yourself a favor and ignore these enticements.

Fear Factor

…what if your apartment gets burglarized? Or, worse yet, suffers smoke damage in a fire? Some renters may think that everything they have inside their apartments is insured under the landlord’s policy, but that only covers the building itself. (Source)

Renter’s insurance is often motivated by fear of the unknown. A fire, flood, burglar, or any other risk may enter your apartment and destroy what’s rightfully yours. This destruction is not covered by landlords.

If you have a wealth of materials in your house, renter’s insurance may be for you. It’s a hedge against negative events. The insurance company lets you pay a small fraction of the total worth on the actuarial assumption that you won’t need the money.

Minimalism

There’s a way to avoid renter’s insurance, feel safe, and live a comfortable life. The secret is minimalism. This term represents a movement towards the essential; basically, eschewing all that’s superfluous for what really matters.

Minimalism can be a powerful tool to feeling free from worry. If there’s nothing to burn or steal, why do you need renter’s insurance? When I go on vacation or leave my home, I’m comforted by my bare apartment. What could anybody want? What’s the worst that could happen?

Yes, my table, chairs, pictures, and electronics could morph into charcoal and dust if a fire occurred. But I place no value in these inexpensive things that are easily replaceable. They’re not worth a monthly hedge that drains my budget even further.

And if you choose to plaster the walls with pictures of loved ones and heirlooms, there’s a priceless nature to these things. Geico doesn’t care about priceless – nor could they actually replace them.

What Should You Do?

When it comes time to consider renter’s insurance, take a critical eye to this apparent money saver. Potentially, it may drain your budget, while making you feel safe.

The decision is yours.

Just know that safety doesn’t always need to be purchased. Sometimes, it takes a philosophical change, instead. That’s where minimalism can help.

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Scared By Another’s Cracked Phone

My friend pulled out his black iPhone 5 and began typing into his screen. Something appeared askew, different then I remembered it. I glanced over the phone and blanched at a nasty crack along the glass face. Immediately, I thought, “I need a smartphone case.”

As a budding frugal man, self-identified minimalist, and spendthrift, buying a new iPhone 5 was probably financially irresponsible. With nearly $40,000 in debt, the latest gadgets are hardly necessities. My one excuse: I purchased the device before I started this journey to tackle my debt and improve my financial future.

Frugal Without A Case?

I developed a strong focus toward spending cuts (my own austerity) and smart financial moves. My iPhone 5, an homage to a bygone spending era, stuck with me. The phone was purchased, and the reasoning was that I would make this one count – this would last me more than a two-year contract cycle. I wasn’t going to fall prey to the lock-in tactics of major wireless carriers.

Despite this vestige to out of control spending, I left it naked, without a case. Somehow, as I entered the frugal world, it didn’t seem financially smart to buy more. Part of me was right. The other part was scared by what had happened to my friend.

Motivated by fear, I quickly purchased an iPhone case with a special discount (a Lifeproof case, in case you’re interested). Despite the sizable bargain, it was still nearly $40. Admittedly, the swift purchase was motivated by fear. I worried I would soon share a similar fate. But was it fiscally responsible?

Why Buy?

A cracked phone can cost hundreds of dollars to replace screens professionally. Even if you do it yourself, you’re looking a supplies and materials that can cost a small fortune. Suddenly, a $40 case seemed far more frugal. Even though I never dropped the iPhone or suffered such consequences, the threat of lost resale value is an important consideration.

Cases are a form of insurance. You’re lessening risk of loses with a smaller investment. With an expensive cost for accidents with these glass-heavy devices, it’s important to protect them. That is, if you’re going to own them at all. Because the reality is that it’s far more frugal to get a cheap, prepaid flip-phone.